Do I need to include the amount in box 12 code p from my W-2 into the TT software if my reimbursement was 100%?

[tm2]

I moved from IL to WI in 2017 for work. It was a requirement for me to move as I needed to be within a certain distance/time from my place of employment.

Under the contract my moving expenses were to be paid by my new employer. I was reimbursed 100% for the move under an accountable plan.

This was reported on my W-2 in box 12 code p. I was under the impression that this amount was not taxable income. However, when I include the amount in the TurboTax software my tax liability (and accordingly refund) changes (liability goes up and refund goes down). 

Under the deductions, I cannot seem to claim a moving deduction as I fail the distance test. So my questions are:

1. Given the 100% reimbursement (without being paid over or under), do I need to include box 12 code p on my return?

2. Am I able to claim a moving deduction despite failing the distance test, given that I was required to move my residence from IL to WI?

Thanks. 

[MichaelDC · Accepted solution]

OK. At this point, your return is reporting that you received reimbursements for moving expenses (W-2, Box 12 P). Even though the reimbursement is not taxed, we need to tell the full story. 

Now we need to say that we moved and used that money for moving expenses. In other words, if you didn't move and use that money for money, the money becomes taxable. 

Here's how to enter your job-related moving expenses. (Make sure that you at least report expenses that add up to the Box 12 P amount. It should be the same figure unless you paid something out of your pocket.) If you have any other details regarding this question, please feel free to post them in the comment section. 

1. Open (continue) your return if it's not already open.
2. Inside TurboTax, search for 3903 and then click or tap the "Jump to" link.
3. Answer Yes to Did you have any work-related moving expenses?
4. Follow the onscreen instructions.

[tm2]

Thanks for the response. It doesn’t give me the option to enter moving expenses because I don’t meet the distance test. So my questions are:

1. Is there another way to show that this money was used for moving expenses? Or does it not matter because I don’t meet the distance requirement and that money reported in box 12 is taxable?

2. Also, is there another way to claim the moving deduction, despite not meeting the distance requirement, given the requirement to move as condition of employment?

Thanks again

Tm

[MichaelDC]

1. Is there another way to show that this money was used for moving expenses? Or does it not matter because I don’t meet the distance requirement and that money reported in box 12 is taxable?
It doesn't matter if you don't meet the distance test (please check again). Tell your employer as he may have taken a deduction that he shouldn't have and instead should have included it in Box 1 of your W-2. He would have chipped in on the payroll tax if that were the case. Also, ask if there was or could now be some "gross-up" to cover for your now increased tax bill.

[MichaelDC]

2. Also, is there another way to claim the moving deduction, despite not meeting the distance requirement, given the requirement to move as condition of employment?

Closely related in place.

You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location isn't more than the distance from your former home to the new job location. If your move doesn't meet this requirement, you may still be able to deduct moving expenses if you can show that:

    You are required to live at your new home as a condition of your employment, or

    You will spend less time or money commuting from your new home to your new job location.

Home defined.

Your home means your main home (residence). It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. It doesn't include other homes owned or kept up by you or members of your family. It also doesn't include a seasonal home, such as a summer beach cottage. Your former home means your home before you left for your new job location. Your new home means your home within the area of your new job location.